Mexico has long been a country in which productivity does not increase as it should, a characteristic of both the transition governments and those of the so-called 4T.
This is what a document published by the Baker Institute, signed by Santiago Levy, shows and shows the prospects for economic growth and social protection in Mexico.
Since 2000, the year of transition, our country has grown at an average rate of approximately 1.5 percent, GDP per capita 0.3 percent and annual productivity only 0.86 percent.
According to Levy, the central cause of the lack of productivity is due to the fact that 55 percent of workers and 90 percent of companies are informal, despite the benefits of NAFTA and then the USMCA.
In turn, 88 percent of informal companies have only 2.2 percent of workers on average. These are people who do not receive the type of benefits that had been considered achievements during modernity.
Such a situation is explained by a number of reasons, including a poorly designed social security system, tax and labor laws that do not respond to contemporary challenges, as well as a lack of compliance with commercial and credit law.
As a result of all this, in Mexico six million companies produce 1.7 trillion dollars, while in the United States eight million of them produce around 30 trillion dollars.
As can be seen, this difference in productivity is enormous. One thing is certain: this is not because the Mexican is not hardworking compared to his American colleagues. In fact, one peso invested in capital and labor in a formal company yields 39 percent more value than in an informal company. The answer rather points to defective institutional designs in the case of Mexico.
The pertinent question, at this point, is why various governments have failed to establish institutions that promote and do not discourage the productivity that is the basis of growth.
If we focus on the situation of the current Government, we realize that other problems have been added to the ancestral problem of informality, for example, low investment in infrastructure, education and health. These three aspects are undoubtedly important foundations for any takeoff towards greater productivity.
As Levy shows in his analysis, low productivity in turn has consequences on public finances, since the Government has to obtain additional resources that can only increase the debt and the government deficit, which has been and continues to happen in Mexico.
The recipe followed by the Government of the previous six-year term failed miserably in making the economy grow. Current government managers had better establish a strategy that corresponds to the true productive power of Mexicans.